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Solving the Mystery Behind Credit Card Bonus Offers

April 14, 2022 No Comments


Credit cards and all kinds of special offers abound everywhere. So, how are consumers supposed to know which ones to go for? It can be quite confusing but savvy shoppers know that they can always count on MoneySmart for all of the inside info about all things money-related and especially credit card offers.



Got Questions?

Most consumers, at one time or another, have some burning questions about credit card welcome new offer. Credit card companies are famous for their enticing bonus and welcome offers. So, the following are a few in-depth answers and explanations about what they are:

What are credit card welcome offers/bonuses?

Credit card welcome bonuses and offers are special incentives that banks and credit card companies often offer for the purpose of enticing new customers into signing up for their credit cards instead of what some other companies are offering. They often come in the form of cashback or additional points of some kind. These bonuses and offers are generally not realised until the cardholder meets a specific spending threshold during a rather limited amount of time. The competitive credit card marketplace of today is actually dictating the real value of bonuses. Those values, however, can really differ widely because they’re based upon the type of credit card offer and even the time of year both when it’s issued and when it’s used.

What is the best time of the year for credit card offers?

If you’ve been considering getting a new credit card, the optimum bonus-friendly credit card season is from October to December. That’s the absolute ideal time. In fact, your overall expenses that can range from Black Friday spending, holiday meals and travel, year-end charitable donations, and more could easily help you with meeting even a fairly large spending requirement for enjoying a sizable sign-up bonus.

How do they work?

A sign-up bonus is a promotion offered by a credit card issuer to entice you to apply for a card and begin using it regularly. Actually, the terminology “sign-up bonus” is kind of a misnomer since, in the majority of cases, you’re not going to receive that bonus simply for signing up. You have to spend a specific minimum amount of money to earn that bonus. That’s why many credit card issuers call them new-cardholder offers, bonus offers, or welcome offers. Sign-up bonuses work by giving you a sizable number of miles or points or even a lump sum of cashback when you have spent a certain dollar amount via your card during a specified time period. This is usually during the first few months following the opening of your account. Once you’ve completed your required spending, the bonus will be applied to your account. Separate from your lump-sum bonus (or sometimes in addition to it) some credit card sign-up bonus offers could include a higher-value rewards structure that’s available, again, for a limited time only. For example, Chase Freedom Unlimited® offers to give new cardholders both a cash bonus as well as a higher reward rate for shopping at grocery stores during the first year.

What are some common bonus offer values?

The value of the bonuses on some popular credit cards can range from $25 to $1,000 or even more. And, with credit cards that are awarding bonuses inclusive of miles or points or miles, those values can really vary. The best sign-up/welcome bonuses are on credit cards requiring minimal spending for earning the bonus. In fact, there are some credit cards that grant a bonus following your first purchase. Then again, some others are requiring just a relatively modest amount of spending (for example $500) for earning a bonus. It’s also important to remember, however, that those easier to get bonuses tend to offer lower values.

Are signup/welcome bonuses or any other credit company bonuses taxable?

No, generally they’re not taxable. That’s because the IRS actually considers credit card bonuses and rewards as discounts or rebates or discounts and doesn’t classify them as income.


Final Thoughts

So, now that you know a little bit more about how credit card welcome offers/bonuses work, you might want to find out even more. If so, MoneySmart has a wealth of credit card offers and more info to help you navigate the often tricky credit card company landscape.

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